CGD's Mark Plant and University of Oxford's Adrienne Cheasty, formerly of the IMF, discuss how SDRs work, what the IMF's new allocation means, and what needs to happen to ensure its effectiveness.
CGD Policy Blogs
How to Strengthen the Role of Pan-African Institutions Within the International Financial Architecture
In a recent joint piece, African and European leaders underscored the importance of strengthening the positions and roles of pan-African institutions within a new international financial architecture, reaffirming one of the four key goals of the summit on financing African economies held last May in Paris. What is the new international financial architecture? Which pan-African institutions are targeted and why should their role and positions be strengthened within it? How should Africa and its partners proceed to achieve this goal?
The puzzle for development finance experts has been that the capital flows from developed financial markets to developing countries are nowhere large enough to meet financing needs for the Sustainable Development Goals (SDGs), even if official assistance were to be ramped up significantly. Cyclically low investment returns in the developed world should make investment in developing countries quite attractive, yet investments in frontier markets, particularly in Africa, do not begin to meet the development needs of these countries.
You may have missed a recent dry-sounding but groundbreaking report,. It summarizes data from the Global Emerging Markets (GEMs) Risk Database for a set of 11 multilateral development banks (MDBs) and development finance institutions (DFIs) on default rates on their credits to private and sub-sovereign borrowers, which accounted for 82 percent of exposure in 2019.
The COVID-19 pandemic has left a large dent in the government budgets of low-income countries (LIDCs). During 2020, they had no choice but to increase public spending to fight the pandemic at a time when shrinking economic activity depressed their revenues. In this blog post, we argue that while these efforts to expand the flow of concessional resources to LIDCs are laudable, they are unlikely to be sufficient and, going forward, some form of debt relief will be necessary to secure fiscal sustainability down the road for these countries.
Expanding Vaccine Access and Humanitarian Financing Should Be Urgent Objectives for the World Bank and IMF
Shortly before the Spring Meetings of the World Bank and the International Monetary Fund, we set out how they could be a turning point in addressing the consequences of the pandemic.
The decision to allocate $650 billion of special drawing rights from the International Monetary Fund to the global economy is welcome. One way to use this extra ration of global liquidity will be to bolster the concessional lending pot the IMF has to help low-income countries—the Poverty Reduction and Growth Trust.
Recently, my colleague Clemence Landers argued that International Development Association (IDA), the largest source of concessional loans and grant finance for the world’s poorest countries, needs to “go big” in its next replenishment.
How an Allocation of IMF SDRs To Africa Could Be Supported by A Multilateral Reallocation Initiative
A general SDR allocation has the potential to provide rapidly additional liquidity to African economies, thereby enhancing prospects for crisis mitigation and recovery.
Beyond the Money: How IFIs and MDBs Can Better Support Pandemic Recovery in African Low-Income Countries
This blog proposes some critical steps—many of which are long overdue—that international financial institutions (IFIs) and multilateral development banks (MDBs) must take if their money is to work more effectively to support African countries recover from the pandemic’s fallout.